The Prime Minister said she has finally reached a “collective” agreement on the basis of the future relationship between the UK and the EU.

Ministers have signed up to a plan to create a free trade area for industrial and agricultural goods with the bloc, based on a “common rule book”.

However, amid concern from ministers including Brexit Secretary David Davis that the European Commission will reject the plans, the Government agreed to “continue preparations for a range of potential outcomes, including the possibility of ‘no deal”.

It added: “Given the short period remaining before the necessary conclusion of negotiations in the autumn, we agreed preparations should be stepped up.”

The EU’s negotiator, Michel Barnier, who earlier suggested the EU would be willing to change its position if the UK relaxed some of its “red lines”, tweeted his reaction to the Chequer’s meeting on Twitter.